Last month, Chinese consumer electronics giant LeEco made a splashy entrance into the Western market, showing off its plans for super cheap TVs, smartphones, an electric bike and VR. It was even supposed to show off its Faraday Future electric car, but that didn't end up happening.
But now, just a few weeks after that splashy debut, the so-called Chinese Netflix is admitting that its hyper-growth, which includes the $US2 billion ($2.6 billion) acquisition of Vizio, might have been too much too soon. In a memo sent to employees, obtained by Bloomberg, LeEco co-founder and CEO Yueting Jia said:
No company has had such an experience, a simultaneous time in ice and fire. We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited.
According to Reuters, the letter also read:
We are starting to see signs of big company disease, such as low individual performance and organizational redundancies. In order to realise the rapid and positive growth of the Eco operation, we will cut costs to reinforce the awareness of capital control and efficient operation.
This shouldn't be completely surprising. The products that LeEco is putting out are, by all accounts, high-spec and high quality. But the prices are extremely, extremely low. For instance, LeEco's high-end $US5000 ($6515) 4K TV is comparable to models that cost twice as much, and its Le S3 smartphone will retail for just $US400 ($521), a full $US250 ($326) less than a nearly identical-specced Google Pixel.
That's before we get into all the other areas that LeEco wants to get into. The car story alone, through both Faraday Future and its Tesla-like in-house concept, has surely cost huge sums of money. As Jalopnik pointed out last month, despite all the hype, there is still very little to show for either project.
Selling good products for super-low prices is awesome, but at a certain point, you have to make money. It's not clear what this recent hiccup means for LeEco's Western ambitions, but one would hope that the company will continue its plans - albeit at a slower, more measured pace.
We reached out to LeEco for comment but had not heard back at time of writing.